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A Look at Iran Sanctions Relief Scenarios

March 5, 2021

As the US presidency officially changed in January of this year, questions regarding the new administration’s approach on sanctioned nations (Iran, Venezuela) as well as the overall energy policy have been increasing in frequency.  We have already seen efforts to promote a “greener” plan on energy production, steering away from fossil fuels and into heavier investing for renewable sources.  At the same time, it makes sense to expect that the Biden administration could be more lenient towards sanctioned nations, potentially opening up additional pathways to diplomacy.

For this week, we are going to focus on the potential scenario of ...

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Examining the US Crude Supply Recovery

Feb. 26, 2021

Last week’s freeze and winter storm that swept through Texas brought low temperatures that in many cases had not been seen for generations.  This kind of severe weather had a tremendous impact on US shale crude supply from the southern state.  The freezing temperatures destroyed valves, pipes and other equipment and loss of power from an overwhelmed grid made it impossible for wells to keep pumping, resulting in a 1.1 million b/d less production according to the latest Energy Information Administration (EIA) estimates.  The same combination of external factors led refiners in the region to shut down ...

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Will Crude Demand Ever Truly Recover?

Feb. 19, 2021

A misconception we come across often in our industry is that oil demand and crude demand are one and the same.  To clear this up right away, when we are discussing crude demand, we refer to demand at the refinery level.  Oil demand on the other hand includes the total demand of refined products at commercial and industrial markets as well as other products, which do not require crude oil refining.

Another, perhaps, misunderstood element in the analysis of crude and oil demand is the relationship between refinery capacity and crude demand.  While there is a positive correlation between the ...

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A First Look at the VLCC Fleet Development

Feb. 12, 2021

Throughout the course of a year, we put considerable time and effort to monitor and project the tanker fleet developments.  Extensive analysis and statistical models have shown how fleet utilization measured as forward month’s ton-day demand divided by current month’s ton-day supply is closely correlated to tanker earnings development.  What that means in practice is that fluctuations observed in the total number of ships trading can have a significant effect in utilization statistics, therefore earnings.

The impact of relatively small fleet adjustments becomes more pronounced in the VLCC sector and in turn the VLCC sector has relatively the ...

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Global Refinery Capacity and Utilization Expectations

Feb. 5, 2021

In 2019, we saw some significant refining capacity additions, especially in the Far East and Southeast Asia.  In 2020, despite the absence of oil demand, a large amount of projects were completed, again most of them in Asia.  In terms of the relationship between capacity and utilization we have noted many times that refinery capacity does not mean that all of it is utilized and indeed 2020 was a year of very low utilization rates amid low demand and a low margin environment. 

As we move beyond 2020, we expect refinery intake to rebound, although it is unlikely to see ...

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